Answer to Question #45545 in Finance for Marie

Question

Can you please explain why the sale price on the pizza question is 12 when it's on a 20% promotion but after the promotion it drops to 9.60 should the sale price not increase after the promotion has finished

Answer 1

If the promotion was successful, the demand for pizza will increase, after which the price for pizza should increase too according to the law of demand. So, the sale price should not increase after the promotion has finished. But if in was not successful, the price may be the same or even decrease.